Case Study - Full Time Student - Next Steps

[knoxoverstreet]

Hello Mustachians,

Thank you in advance for reading this. I am so inspired by reading your stories and I'm feeling optimistic about my financial future for the first time in years.

Life Situation: 28 year old full time student. Single filer. Currently live with roommates and moving in with my girlfriend in August (she makes $30,000/year but we will be keeping our finances separate besides splitting rent and utilities. She is accepting of my frugality but hasn't been interested in learning more. I'm working on it.) We live in Pittsburgh, PA.

My income is $1700 a month (gross) working a full-time landscaping job. Biweekly I'm bringing home $650 with taxes taken out. I don't love the job but they are very flexible with my school hours and the work is low-stress. I would work more if I could but 40 hours + a full time night school load + 15 hours of field placement is all I can currently handle.

Current monthly expenses:
Rent - Currently $390, will be $488 in August.
Health Insurance $89 through Marketplace
Car Insurance $68 through Geico
Cell Phone $40 through Boost
Utilities $75 shared with roommates
Gas $60 - I drive to work but I take public transport (free through school)/bike as much as possible
Groceries $300
Restaurants $30
Misc $50
Total $1,102

I have a secured credit card that I use only for building my credit - I usually put my gas on the card and pay it off as soon as the credit boost registers monthly.

I was given a 2004 Honda CR-V in 2017 by a relative.

I have no savings and I have been paycheck to paycheck for years. It seems like every month I have a new random expense, $200 to register my car, $400 for new tires, new (used) boots for my job. Any time I ever save up a small amount of money it tends to get wiped out by these random occurrences. I do meticulous research on every medium and large purchase I make and try to buy used as much as possible.

Liabilities:
$48,000 in student loans at 3-6.8% interest rates. Will have $57,500 in total loans at those interest rates by graduation in April of 2019. Currently all in deferment while I'm enrolled in school.

I have several questions so feel free to answer whichever areas you think will benefit.

1. First things first, I need to find a way to pay for summer classes: $2,500 for one math class at my expensive as hell university and $800 for the other two summer school courses I'm taking at a community college and transferring. I am nearing the max I can take out for federal student loans and I'm saving my remaining balance for the fall. I have to take the math class in order to graduate on time. I've thought about applying for a personal loan through my bank but the minimum you can borrow is $5,000 and I don't know much about repayment options. Does anyone have any advice about the best way to do this that won't f me over long term?

2. My plan has been to go straight into grad school for a dual MSW/MBA program. I am earning my Bachelor's in Social Work and in order to practice professionally as a social worker in PA you have to have a MSW. However, I'm not really married to the idea, especially after lurking on MMM for the past few months. I don't know if the additional $80,000+ in debt is worth it. I'm open to pretty much any job that doesn't suck and pays me $30,000+ and offers opportunity for growth. I still have plenty of time to decide, so I wanted to ask what others thought. It's easy to get caught up in the fervor of my program where most of the students pursue the MSW. Have others found graduate school to be worth it?

3. What factors should I consider when looking for my first "real" job? I will be seeking out somewhere that I can bike or walk to and obviously hope to have healthcare coverage and other benefits, but what else should I be aware of? What does a good retirement plan look like?

4. How should I attack my student loan debt after graduation? I know the specifics of this will vary greatly on my income, but I think it's safe to assume I will probably be making 30-40K max in my first few years of employment. I've been reading about people making minimum payments while investing the rest of their money in the stock market.

5. What changes can I make to my monthly budget/spending?

I appreciate any feedback that anyone has. I know a lot of things are hypothetical/up in the air but I want to try and be proactive as possible to avoid future stumbles along the way. Y'all are amazing.

[Freedomin5]

Do you qualify for any scholarships? Look for privately funded scholarships, like the random small amount ones that are administered by corporations or non-profit organizations or family trusts. Just do a Google search for “scholarship social work + _____” Sometimes there are scholarships from alumni. Sometimes there are scholarships for social work students. For your MSW you may qualify for one of those big government scholarships where you have to find a job servicing low-income or vulnerable populations after you graduate to get loan forgiveness.

I found grad school to be very worth it, and I’m in a related profession to social work. But then again, I chose my school because of the scholarship I received.

It might also help to keep your eyes open for a better paying job. With a BSW/Psych degree some of my friends worked as a case worker. Others worked as an intake worker at the local hospital. you could also see if there is a demand for tutors and charge $25 per hour. Anything to up your hourly rate. Finally, you may want to consider working for a couple years before applying for the MSW program. That will give you some time to knock out some of those loans and give you hopefully relevant job experience.

On an unrelated note, your groceries are really high for just one person. I lived in LA as a grad student, and my groceries were about $100 per month. Rent was $250 per month since I had three roommates. I’m not familiar with the Pittsburgh rental market but $976/mth for an apartment sounds luxurious. The internet is telling me I can get a four bedroom for $1900 per month and a two bedroom for $995 per month in Pittsburgh. So maybe consider getting a roommate if yours is a two bedroom. Then your share will only be around $244 per month.

Also, maybe don’t tell us you’re living paycheck to paycheck and in the same post tell us you’re moving to a more expensive apartment. That doesn’t come across as trying to be frugal.

TL;DR.  Be on the lookout for ways to increase your hourly rate. Make spending decisions on major items like rent and food that Decrease your spending, not increase it. Look for “free” money in the form of scholarships to fund your education.

[plog]

First, don't be a victim, take responsibility for your lack of foresight.  Car registration, wearing out tires and boots are not "random" expenses.  Those are all things you can see coming and budget for. 

Second, what type of humanities degree requires a $2500 math course?  You should be able to knock off all the math required for that at a local community college.  I suspect its a timing issue and you are paying a premium for the class so you can graduate on time.  So it might be worth it to take that class cheaper some where else even if it delays your timeline.

Third, I would really start thinking about if being a social worker is worth starting off your career with $100k in debt.  "Is graduate school worth it" is ultimately a personal decision--financially it makes no sense.  I know a few social workers (and teachers)  and they sacrifices they have unwittingly made to the jobs they have is just astounding to me. The financial return is just not there--$100k in debt for a $50k a year salary (and hopefully the government doesn't end it--loan forgiveness in 10 years if you play the game right) just is not worth it.   So, if being a social worker fulfils you personally and outweighs the financial burdens that will be placed on you, then thats fine--just go in with open eyes to the whole thing.

[Raenia]

Are your monthly expenses budgeted categories, or actual historical values based on several months of data?  Based on your comments about random expenses cropping up, I'm guessing the former?  If so, make sure you are accurately tracking your real expenses, not just your anticipated expenses.  Car registrations, tires, clothing, etc are all recurring expenses that need to be accounted for in your budget.  If your budget is accurate, then you should be coming out with $200/month of savings.

I agree with Freedomin5 that your grocery spend is very high for a single person.  I also spend about $100/month per adult.  Do you have any food allergies or other situation that makes this so high?  General recommendations for getting the food bill down: eat less meat (not every day), rice and beans are your friends, leftovers are your friends, make sure you aren't wasting food or letting things go bad.

Regarding whether to pay off the loans after you graduate, that will depend on the specific interest rates.  Check out this thread for details, but offhand, I'd say pay off the 6.8% one, but let the 3% one ride on minimum payments while investing in your IRA.

[Tass]

My income is $1700 a month (gross) working a full-time landscaping job. Biweekly I'm bringing home $650 with taxes taken out. I don't love the job but they are very flexible with my school hours and the work is low-stress. I would work more if I could but 40 hours + a full time night school load + 15 hours of field placement is all I can currently handle.

Current monthly expenses:
Rent - Currently $390, will be $488 in August.
Health Insurance $89 through Marketplace
Car Insurance $68 through Geico
Cell Phone $40 through Boost
Utilities $75 shared with roommates
Gas $60 - I drive to work but I take public transport (free through school)/bike as much as possible
Groceries $300
Restaurants $30
Misc $50
Total $1,102

I have a secured credit card that I use only for building my credit - I usually put my gas on the card and pay it off as soon as the credit boost registers monthly.

I was given a 2004 Honda CR-V in 2017 by a relative.

I have no savings and I have been paycheck to paycheck for years. It seems like every month I have a new random expense, $200 to register my car, $400 for new tires, new (used) boots for my job. Any time I ever save up a small amount of money it tends to get wiped out by these random occurrences. I do meticulous research on every medium and large purchase I make and try to buy used as much as possible.

This budget LOOKS like you should have $600 left over every month, but you say you've been living paycheck to paycheck. Car registration, tires, and boots don't cost $600 a month - so, is this your realistic spending, or your idealized budget? If the former, what has your extra $600/month actually gone toward for the past year? Even if you don't share it here, you have to be honest with yourself about what you're spending first.

With $600/month, you can have a $1k emergency fund in two months, and a $200 expense won't mean living paycheck to paycheck anymore.

Here is my (also full-time student) version of your budget:

Rent - $782 (that's CA for you)
Health Insurance - N/A (through school)
Car Insurance - $26 (I can afford to replace my car if I total it, so I dropped my coverage to state minimum levels + enough to cover my savings. If someone else wrecks it, I'm covered; if I wreck it, the car is worth less than $2k and I can pay that much in cash for a new one. Look into reducing your coverage - be realistic about your risk tolerance, but also the fact that you have effectively no assets to protect.)
Cell Phone - $22 (family plan with T-mobile; can you shop around for group plans to join with friends/girlfriend/roommates?)
Utilities - $50 (shared with roommates - see if there's anything easy to cut here; TV? Excessive internet speeds? Blasting the A/C all summer long?)
Gas - $30 (I live 3.5 miles from work; exclusively bike to the grocery, library, etc.; try to avoid/carpool for longer trips)
Groceries - $120 (you should be able to halve your bill! Look around for threads here for ideas)
Restaurants - $15 (once a month at a reasonably priced restaurant)
Misc - $20 (gifts and haircuts. A dangerous category! I also have once- and twice-yearly expenses for car maintenance and that kind of thing; include these in your calculations.)
Total $1,065

Despite my drastically higher rent, I'm spending less money every month! Granted, it would be slightly more if I were paying your health insurance rates; I don't know whether your rate for that is good or not.

Once you've made some obvious cuts, I would pick one of these categories (groceries!!) and try to see how low you can get it this month. It doesn't have to be insanely low immediately, just work on steady progress in spending less. Good luck!

[Tuskalusa]

On the grad school question, you might want to consider working for a couple years first. No only does this give you a chance to start tackling those loans, but it also gives you some work experience and perspective. When you invest in grad school, it’s important to have a very clear idea of what you plan to do with that degree. Grad school is a lot of time, effort, and money. Working for a couple of years first will give you perspective on the specific jobs you want to target, once you have a degree.

[frugalfoothills]

I will jump in with the poster above who suggested you really think hard about whether a graduate degree in social work is something you need/want. My close friend is in social work, is in an executive level position, and has maxed out (or very nearly maxed out) any room for growth salary-wise. She makes less than $50,000 a year and has over $100,000 in student loan debt to repay.

I know you think $30,000 or $40,000 a year might be a fine salary as you're saying you're willing to accept that, but please know, it is pretty difficult to make ends meet on that... especially if you have six figures in debt to contend with. I think one thing people don't think about is how starting out saddled to such extreme debt with such a low income often times leads to MORE debt... because your paychecks will be small, a large amount will be gone immediately for things like rent, bills, and your student loan debt. It's a very slippery slope to begin relying on credit cards to make ends meet for things like food, or when you decide you want to treat yourself every now and then. Suddenly you don't just have student loan debt but you also have credit card debt you're trying to climb your way out of, and the thing that would most help you make any traction would be an increase in income, which is just not realistic in that field. There is a very real ceiling as far as pay goes.

For my friend, this is her passion and that's what drives her. That seems to be the case for most who enter this field. If it's not your passion (and it doesn't sound like it is, seeing as you're "unmarried" to it), I would really stop and think before hitching your cart to that horse.

[shelbyautumn]

I just want to be a bit of an encouraging voice here. My best friend just finished her MSW last year. She’s in Maine, so I don’t know how their licensing rules differ from yours but after she became a LMSW her salary jumped from $20,000ish to $50,000 plus overtime. I also had a boss whose husband was a LCSW for the VA - he made a six figure salary. It’s possible to be a social worker and not be poor forever. You won’t ever make engineer or doctor money, but the world needs social workers, too.

There is also a federal program that will pay up to $50,000 of student loans towards a MSW. To qualify, you'd have to work at an approved facility for 2 years. https://nhsc.hrsa.gov/loanrepayment/

If you have more than $50,000 in loans, you can apply to extend your service and receive additional loan repayment assistance.

As far as your budget, you should be able to spend less for groceries. I spend too much on groceries and I’m at $400 for 2 people. Can you find another job that pays more? I was able to work full time in the admissions office throughout college. I was grateful for the work and time management experience when I graduated. Plus they had to be flexible with my schedule. I was making $10 an hour back in 2009, I think you should be able to find something flexible that will pay a bit more or even relate more to what you want to do. Landscaping isn’t really building your social work resume, it’s just helping make ends meet. Why not try to find something that can do both?

Best of luck to you!

[westtoeast]

Thank you in advance for reading this. I am so inspired by reading your stories and I'm feeling optimistic about my financial future for the first time in years.

This is awesome! You should feel optimistic, because you are here. I was also living month to month with zero savings when I found the site in my late twenties. It is amazing how quickly things turn around with these strategies. I'm not sure I have a ton extra to add, but I also wanted to pip in with an encouraging voice.

I think I agree with the suggestion to work full time for a few years before pursuing the MSW. This would allow you to build up an emergency fund AND get some money in the market. That way, if you can't invest while back in school, you will at least have something growing in your retirement accounts. Plus, it will give you time to become SURE that you really want/need the MSW.

I'm also wondering if you could do the MSW as a part time or evening student so you can also work full time. I did my MA degree that way. I know there may be some limits here though, because the MSW requires some field work/internships.

Finally, I'm jealous of your rent. Philly seems like an affordable city! But since your overall expenses are pretty reasonable, it does seem like the only major places to cut are 1) slim down the grocery budget, 2) get rid of your car and commit to the bus, and 3) find a two bedroom apartment and put a roommate in the 2nd room.

[civil4life]

One thing that has not been thrown out there is that you hardly use your vehicle.  Could you get rid of it all together.  Use Uber/Lyft or Taxi or zipcar (not sure if that is in PA) or do you have a friend you could borrow when needed?

Also is the math class available online and transferable?

Why is the rent going up?  New place, rent increase with new lease, losing a roommate.  August is a long way a way.  Hunt for a better option.

With the landscaping are you able to get much work during the winter?